The Indepayment Story

We’re freelancers just like you, and we got stiffed, just like you. Actually, we’re lawyers who, embarrassingly, got stiffed by a client (or two) for part of our invoice. We did someresearch and found out that we were not alone (The Threat of Nonpayment: Unpaid Wages and New York's Self-Employed and Independent Workforce Issue Brief). Millions of freelancers, independent workers and small businesses have at least one invoice unpaid each year. The cumulative amount owed is in the billions. And growing.

When we tried to collect, there were very few options for us. We called and called the debtor, emailed and emailed, too, but got no response or got the run around. Even as lawyers, we quickly realized that the time and expense of going to court and the risk that the judgment would be unpaid made a lawsuit impractical. Debt collectors appeared to want to work with us, but in reality they were shady and uninterested in collecting our one debt. Some online services wanted us to pay a subscription to manage our receivables. But that’s a silly expense, throwing good money after bad.

So then we had a big idea: why not leverage the new reputation economy to force clients to pay? After all, who would want to do business with someone who has a reputation for not paying, or paying late? The IndeScore was born.

But to make the IndeScore work, we need freelancers, independent workers and small business to tell us who owes them money. The best way to do that is to attempt to collect unpaid invoices, for free.

We could do that because it turns out that trying to collect one debt is frustrating and futile, but trying to collect thousands of debts is a business. It’s a business we know well because one of our clients (not one of the ones who stiffed us) “manages” portfolios of consumer debts. As a debt manager, he places the debts in bulk with his own network of collectors.

By aggregating debts owed to freelancers, independent workers and small businesses, we could develop our own network of debt collectors (our “Network Participants”). Our Network Participants would take the debts from Indepayment seriously and try to collect. Aggregating debts also allows us to develop a market for “charged off” debts, those debts that the creditor does not want to collect but, rather, get off their books. It’s an option available to almost every other type of creditor, but not to freelancers, independent workers, and small businesses. And, of course, through the IndeScore we’re keeping tabs on which commercial debtors pay and which do not. Soon we will offer milestone payment and escrow services, too, so we can try to avoid having invoices unpaid. Basically, it all just sort of clicked.